accelerating technological development (“Moore’s law”, or, rather Kurzweil’s Law Of Accelerating Returns) is pushing technology over the threshold needed to replace humans in many areas in short order, thus attracting more investments

low interest rates make investments in technology even more attractive

Thus, automation is proceeding faster and in more industries simultaneously than ever before, leaving more people than ever (at best) between jobs.

Low interest rates have fueled the build-up of debt among governments and private individuals. Despite lip service to deleveraging since 2008, debts are much higher today than at the “peak” 8 years ago, leaving less room for debt-financed re-training for new jobs.

Leverage => more machines, more debt => less jobs, less re-training buffer

The same forces that make automation investments more attractive and all the more people lose their jobs to machines, also work to make it more difficult for people to be able to finance re-training (one, because they are already over their heads in debt*; two, it’s happening faster and in more industries at the same time than before, leaving less time to re-train)

* Earlier, people hadn’t maxed out on credit card loans, auto loans, mortgages and student loans, which meant the few who lost their jobs to machines had some leeway in time and money to re-train for new employment.

Now, more people are automated away at the same time and they have more leverage and thus no economic room for time off or investing in re-training.

Goldman Sach’s take on the subject in a recent podcast of theirs called for new ways of financing re-training, including re-purposing (expropriating?) pension money. I, however, think that ship has already sailed.

So, what to do?

My 2 cents: Make sure you own assets that benefit from the changes, since I expect it to get really ugly first, in a way money printing can’t mitigate, before it gets better and we can approach the Star Trek ideal of no money.

The Sprezza (and Star Trek) credo

The acquisition of wealth is no longer the driving force in our lives.

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12 Comments

Please don’t be Dr. Doom. We are a long way from machine replacing humans in a large scale, and when that does happen, hopefully we will have adapted to a new way of life and a new way of doing things.

As for investments, only invest in stocks if you know what you are doing and have the stomach for it. For 99% of the population sticking to a handful of ETF’s with low fees is the better option IMO.

I’m not really being a doomsayer on a large scale here. I just want young people to realize just getting a job won’t make them safe, unless they keep preparing for the next step. Ten years ago some thought being a taxi driver was safe… ten years from now human drivers may even be outlawed in some (most?) places.

Ten years ago, nobody could contemplate a computer winning Jeopardy or beating a top Go player, not to mention diagnose cancer better than the top oncologists. Now it’s routine. Ten years down the road from now, you’ll have that power in your phone (or rather, in your eye implants or contacts). The automation process is right on the cusp of taking off. I’m not saying scores of people will become unemployed or discarded, I’m saying if you are prepared you can rise to the top more easily than your peers.

Very good. I agree with you for the most part, but what the future really holds is anyones guess. Imagine a driverless car that needs to make an ethical decision between crashing into a school bus full of children, or swerving of a cliff killing only the 2 passengers on board…

How do you prepare for the future, when you do not know what the future will look like. My best guess relates back to one of your previous posts on constant self development and it’s Japanese philosophy of Kaizen.

To be ahead and rise above your pears, you need to always be getting better. Get more educated, fitter, smarter, healthier, etc.

Here in the US at least, job security has been non-existent for decades. Automation was not required. I started my career as a banker, and quickly realized they were consolidating as fast as they could. Most jobs would go away or have downward wage pressure.

At the same time, anybody producing physical goods was locating to 3rd world countries as fast as they could. And 3rd world people were moving in as fast as they could. Very intense competition for every type of job.

Young people can find good jobs if they are technically minded, but you must constantly retrain and be the most expert. If you get lazy, you will be road kill in a few years. Like running on a treadmill. The machine never tires, and your boss constantly gooses the controls faster. I worked hard and made myself both a technical and investment expert. The idea was to save and get off that treadmill as soon as I could.